Friday, June 29, 2012

Conservatives are criticizing Chief Justice John Roberts for
not voting with the conservative branch of the Supreme Court and declaring the
entire Affordable Care Act unconstitutional.Now that a day has passed on the decision conservatives should evaluate
what really happened in the Roberts’ decision.

First, the Court reframed the mandate to participate in
Obamacare as a tax.If you don’t have
medical coverage, the IRS will impose a tax. John Hennessey has some interesting facts
about how the tax will work.There will
21 million uninsured Americans, and of this number, 3.9 million will be subject
to the tax.This includes 400,000 people
who make less than $11,800.The tax will
be $750 per adult and $375 per child each year.This will raise between $2 to $ 3 Billion
per year, which will not cover the health care cost of 3.9 million people.Further, as Hennessey points out, since the
mandate is now a tax, there is no longer a moral stigma not to buy a health
care policy from a carrier.The
exercise of determining whether to buy one or not will become a simple
cost-benefit analysis for most people, and since the costs of the penalty tax
are far less than the cost of most policies, then it is fair to say that the
number of people electing to pay the penalty will rise much higher than the
current projected number of 3.9 million.The result will be that the costs of health care for this group that
exceed the corresponding tax revenues that the government will now pick up will
be seriously high.

Second, the Court enabled the States to opt out of the plan
when it comes to Medicaid.There were 26
States who objected to the Obamacare provisions that required them to increase
their participation in Medicaid or suffer penalties.If the States did not invest additional
dollars in Medicaid, they would loose the ability to participate in the Medicaid altogether.The Court stuck down the
penalties and States can continue their participation in Medicaid at current
levels.This will apply to most of the
50 States.Even those who did not join
the 26 States who petitioned the Court will see that the advantages of not
raising support levels to balance their budgets.The higher support levels will transfer to
the Federal Government.This increases
the cost of Obamacare considerably.

These two facts by themselves mean that Obamacare is
broken.It will run huge deficits.Yesterday, Senator Lindsey Graham from South
Carolina said he wanted the Congressional Budget Office (CBO) to re-evaluate
the cost of Obamacare under the new financial conditions that the Court imposed
yesterday.When the program passed the
Senate the CBO said that the program would be revenue neutral, meaning the
costs and the revenues would be equal and the Obamacare would not run a
deficit.That can no longer be said and
we need a new cost analysis.

Since Obamacare is broken, it is up to President Obama to
fix it.It is his singular accomplishment
and he sold it on the condition that it would not contribute to the national
debt.Since it will contribute to the
debt, he must propose changes that will fix it.

Now for the politics of this.Governor Romney, the presumed Republican
Presidential candidate said that he wants to “Repeal and Replace”
Obamacare.The press is starting to
question him as on what he will use as a replacement for Obamacare.Fair Question.But it is also a fair question to ask
President Obama how he will fix his own Obamacare to bring it back to being
deficit neutral.This is the way he sold
it, and he should fix it.

This is no small task for the President.Republicans are angry at the President for his remarks from March 2009 when he said the mandate was not a tax and then he
defended the mandate before the Court on the basis that it was a tax.Senator Graham said that if he defended it
before the Senate as a tax it would have received only 10 votes and would not
have passed.Clearly, the President has
a credibility problem.Add to this that
he has not been serious about restraining the growth in the national debt, and
his refusal to recognize that Obamacare has been a deterrent to job growth, and
one can conclude that he has a major re-selling problem.

It was Queen Victoria’s favorite Prime Minister Benjamin
Disraeli who said that inside every success lie the seeds of tomorrow’s
problems.Apparently, tomorrow has come
for Obamacare.

On a related topic, I recommend George Will’s column on how
the Court restricted the use of the interstate commerce clause for the
mandate.It is available at this link.

About Me

Who am I? I am a guy who has had a number of jobs in both the private and public sectors, most in finance, planning, and management. My educational background includes studies in public administration, public policy, finance and accounting, computer systems, mathematics, and recently, economics. I grew up as a conservative Republican who loved Nixon up until he broke my heart. I have also liked some Democrats such as John Kennedy and Birch Baye. This is my first attempt ever at trying to be public with my opinion. I would prefer spending my time taking classes, learning new things, enjoying close relationships, and looking forward. But if more of us from the old middle would be more vocal, perhaps our politics will change. My educational background includes a PhD in Public Administration with emphases in public finance and public policy, a Masters of Accounting, and other degrees. My experience includes project management positions with a defense company, a computer company, and a transportation company. I have also taught at several universities and colleges in two states.